Goodlatte Bows Innovation Act to Target Patent Litigation Abuse

The Innovation Act would enact heightened requirements for entities suing for patent infringement to provide more detailed information about the patents at issue and how they have been infringed. The bill would also change fee-shifting requirements in patent lawsuits to align with the requirements included in the Equal Access to Justice Act and would require the plaintiff in a patent lawsuit to provide the defendant, the court and the U.S. Patent and Trademark Office with basic information about the patent. Unlike the September discussion draft, the bill’s final version no longer requires that information be made public. The bill also would allow a product manufacturer to “intervene” in patent lawsuits against the product’s end-users, provided an adequate action against the manufacturer is possible. The bill would require PTO to do studies on oversight of the secondary patent market, U.S. government-owned patents and access to patent information during the PTO examination process. It would also require PTO to develop new outreach efforts to small businesses on abusive patent litigation practices and patent transparency.

HR-3309 changes some court procedures in patent-related lawsuits, including enabling courts to join multiple parties together when there’s a common interest in a patent and to limit discovery in a lawsuit until claim construction occurs. The bill also amends some portions of the America Invents Act, most notably extending the business method patent review program created in AIA to include all “first to invent” patents. Critics have claimed provisions in the bill that change court procedures related to patent cases will threaten the separation of powers between the courts and Congress, but Goodlatte said Congress has a constitutional right to write the courts’ “rules of the road.” Still, Congress will make sure it seeks out the opinions of judges who hear patent cases as it moves forward, he said.

Most changes between the September discussion draft and HR-3309 are very minor cosmetic revisions -- and that’s important because it shows the September draft was a “really good start,” said Julie Samuels, an Electronic Frontier Foundation staff attorney who has focused on patent litigation. “People thought it was a really good draft, it’s been commented on by pretty much every major stakeholder as far as I know,” she told us. “People had time to live with it in a way that makes me feel really confident about this bill’s prospects going forward."

The bill had drawn at least 10 cosponsors when Goodlatte introduced it, including House Science and Technology Committee Chairman Lamar Smith, R-Texas, and House Intellectual Property Subcommittee Chairman Howard Coble, R-N.C. Smith said Wednesday that the Innovation Act would be the “single most important patent reform or high-tech bill this Congress considers.” The other original cosponsors were: Reps. Spencer Bachus, R-Ala., Jason Chaffetz, R-Utah, Peter DeFazio, D-Ore., Anna Eshoo, D-Calif., Blake Farenthold, R-Texas, George Holding, R-N.C., Zoe Lofgren, D-Calif., and Tom Marino, R-Pa. Eshoo said bipartisan support was necessary to make the bill successful, and that it represented a “bookend” to parallel the securities litigation reforms Congress enacted in the 1990s.

Chaffetz and DeFazio had introduced the Saving High-tech Innovators from Egregious Legal Disputes Act (HR-845) in February (CD Feb 28 p16), but are now deferring to the Innovation Act. “This is a much more comprehensive and much better bill,” Chaffetz said. Chaffetz will focus on passing the Innovation Act, but had no plans to formally withdraw the SHIELD Act, said a spokeswoman. EFF and other industry groups strongly supported the SHIELD Act, and Samuels said EFF supported that bill because of its fee-shifting provisions. “If fee-shifting is in a stand-alone bill, that’s okay -- but if it’s in a comprehensive bill, that’s even better,” she said. “The SHIELD Act has been incredibly important to the conversation, and I'd argue it is largely responsible for the fact that fee shifting is included in this more comprehensive legislation. This bill really encapsulates most of the issues we care about.”

Goodlatte said he has an “ambitious” timeline for the bill and is continuing to coordinate with Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., to craft a similar bill in the Senate. Leahy said in a statement Wednesday he’s “continuing to develop legislation” in the Senate in consultation with Sen. Mike Lee, R-Utah, and others. Industry lobbyists said in interviews they have been told to expect Leahy to introduce his bill in the next few weeks. House Judiciary will hold a hearing Tuesday that will focus on the Innovation Act -- and the feedback the committee receives then will guide the bill’s future timeline, Goodlatte said. “We're hoping to move it soon, but it’s best not to draw conclusions until after the hearing.” Samuels said she’s “cautiously optimistic” about the prospects for the bill’s speedy passage, saying it has a better chance now because it’s one of the few items receiving bipartisan support following the end of the government shutdown.

Communications and tech industry groups on Wednesday praised the Innovation Act in statements. CEA President Gary Shapiro hailed the bill’s introduction, saying “frivolous” patent litigation is a “massive problem” that’s only “getting worse.” Patent trolling has “ballooned into a billion dollar industry dedicated to punishing innovators, undermining the integrity of the patent system, killing jobs and damaging our economy,” Shapiro said. “This bill contains smart and targeted reforms that will help promote continued innovation in the U.S. and make life difficult for those who seek to abuse our patent system.”

Computer & Communications Industry Association Patent Counsel Matt Levy said the bill is a “serious effort to address the full scope of the problem.” Competitive Carriers Association President Steve Berry said the bill “will help ensure patent trolls cannot continue their destructive activities. All businesses, but particularly small and medium-sized businesses, should not have to endure costly, disruptive suits.” NCTA said the bill “will help deter patent trolls and put an end to unjustified patent litigation, enabling American companies to focus on innovation, job creation and economic growth.”

Software & Information Industry Association President Ken Wasch said patent reform bills like the Innovation Act have bipartisan support, and that it is “essential that Congress promptly pass legislation that effectively addresses patent trolls without harming the patent protections that spur innovation.” Charles Duan, director of Public Knowledge’s Patent Reform Project, praised Goodlatte for “taking this strong stance toward reforming the patent system. Abusive practices in patent litigation are disappointingly commonplace today, due to an unbalanced patent litigation playing field that makes it easy to bring a case but disproportionately more difficult to defend. The bill introduced today addresses several loopholes that allow for these abusive practices and create that unbalanced playing field.” The Coalition for Patent Fairness said the bill “takes a major step forward in curbing the worst abuses of patent trolls, and CPF supports efforts to move the bill promptly through the House Judiciary Committee and toward full House approval as quickly as possible.”